Working and Investing

I was asked by a fellow investor to write a post about what it is like working a job and investing compared to not working and investing. I used to work full-time, but now spend about half my time looking after my young son and the other half investing.

I traded much less frequently when I had a job because the work prevented me from trading out of boredom. This is the main advantage of investing whilst working in my view.

I used to spend a lot of my free time investing when I was working. This negatively impacted my wife and would be even more troublesome now given we have a child.

When I used to work all I really wanted to do was invest. I would spend all my money each pay check on shares so it is not as if our lifestyle benefitted from the extra income. Now I get to spend more time investing and am much happier for it. The only way the situation could be improved would be if I was employed in the investment industry.

Our family would probably be better off financially if I still worked full-time, but I would be less happy and have less time with my family. I am lucky that my wife works full-time. We are not struggling to pay the bills and our lifestyle is comfortable. If my wife wanted to stop working or our financial situation deteriorated to the point where we were no longer comfortable then I would go back to work. That possibility is diminishing over time as my portfolio grows and if I can even maintain half of my historical returns then it should never be necessary. My family is the most important thing and after them comes my love for investing. I am fortunate to have both.

Comments

  1. Hi Matt, thank you for sharing you journey. It follows a very similar path to mine. Although our portfolios are completely different.

    I now have more time to invest, and I have found it very challenging to resist trading/tinkering with my portfolios.

    Your portfolio is very different to mine, yet we have achieved similar success. Goes to show there are many ways to succeed as an investor......

    regards,

    Sean

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    1. Hi Sean, thanks for your comment. I agree that there are different ways to succeed as an investor. Do you have any tips on how to deal with the urge to tinker?

      Best,

      Matt

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  2. My tips are:

    1) In general, only buy in 1% increments. There are exceptional circumstances - such as high conviction opportunities.
    2) Have a buying checklist that must be ticked off before you buy.
    3) before you buy, outline your thesis, and what the reasons will be for you to sell.
    4) Only sell when the original thesis is broken - not due to price action (up or down). Trimming is OK for portfolio balancing.

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    1. Thanks, some good suggestions. I have a checklist but it needs work and I think this is probably the best thing I could do to improve my process. I have recently started buying in increments although 1% is a bit small for me as a general rule as I'm trying to increase portfolio concentration. One of my rules is to sell if the business goes backwards and I like to assess this as new information becomes available as some things are not foreseeable. Agree that it is helpful to think about in advance though and your suggestion will be part of my revised checklist. The only area on which I potentially disagree is never selling due to price action. I sell when I think a stock is overvalued.

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  3. Good points Matt & Sean, I also run my business about 3 days a week and have plenty of time for investing research. My boy is 15 so while the time with him is a priority, he is very independent so there is not much parenting anymore on my behalf. I agree with the danger of doing too much when I am bored, I have learnt to control that impulsive side of my nature. I find writing a decision journal really helps avoid that particular trap!

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  4. Good post and discussions here, I can relate to a lot of it.

    I think I have dealt with how to deal with the urge to tinker. Surprisingly to me since I stopped working full time I have tended to tinker less with my portfolio. I think it is because I now have the time to write down a thesis before I buy anything. I just do not feel comfortable anymore hitting the buy button before I have done this and gone through a checklist of factors. When I had a full time job I would be more prone to hit the buy button, justifying to myself that because I work full time I need to take a shortcut sometimes and not necessarily jot down the thesis.

    One aspect I struggle with is managing my time. I should have much more if it since quitting a normal full time job. Yet then I read more now so I find myself jotting down more potential stock ideas because of news snippets coming out on stocks, or perhaps other fund manager’s articles. The watchlist gets fatter and then the tough decision is which ones warrant more of a deep dive look at. Now I have a four month old son I am struggling with this even more. Looking at how my stock picks have gone in 2019 I might just get my son to randomly pick out the codes from a list!

    I’m interested in how others go in filtering out which stocks are worth examining in detail and how much time to spend on them.

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    1. Thanks Steve, I definitely know what you mean about the impact of having a young child. I used to spend hours in my head undisturbed playing with stock ideas. That simply isn't possible now. I'll write something about how I filter my shortlist.

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